Sun. Nov 27th, 2022
Brussels, 18 November 2022

The European Commission has approved, under EU State aid rules, a €300 million Latvian measure to further capitalise the country’s Development Finance Institution Altum (‘Altum’). In today’s decision, the Commission has also approved Altum’s enlarged remit. Altum’s main objective is to promote the growth of the Latvian economy by improving access to finance mostly for small and medium-sized enterprises (‘SMEs’).

The Latvian measure

Latvia notified the Commission of its intention to increase Altum’s capital by up to €301.42 million between 2023 and 2029. This capital increase will enable Altum to facilitate access to finance in the following main areas: (i) SMEs and start-ups; (ii) environmental protection, innovation and the development of technologies; (iii) formation of venture capital; (iv) development of agriculture, forestry and fisheries; (iv) support to specially assisted regions and (v) co-funding of EU programmes with the European structural and investment funds or international financial institutions, such as the European Investment Bank.

Altum will only provide financing in markets where market funding is not sufficient or not available. Latvia also intends to enlarge Altum’s remit to finance additional initiatives. This includes for example venture capital initiatives to support SMEs in financing their growth, support for companies to get listed on a stock exchange and support in the area of services of general economic interest.

The Commission’s assessment

The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which allows State aid to facilitate the development of certain economic activities or of certain economic areas.

The Commission found that:

  • The measure facilitates the development of certain economic activities in a variety of sectors that face difficulties in obtaining sufficient finance in the market.
  • The measure minimises the distortions of competition and trade within the EU. In particular, the measure is necessary and appropriate to improve access to finance for sectors or companies that have difficulties in obtaining sufficient finance from the market. The measure is also proportionate as Altum’s balance sheet remains relatively small compared to those of other promotional institutions in the EU.
  • The measure has sufficient safeguards to avoid undue negative effects on competition and trade in the EU. In particular, Altum’s financing activities will be subject to measures ensuring that private investors are not crowded out, should they be willing to provide financing to companies.

On this basis, the Commission approved the measure under EU State aid rules.

Background

On 9 June 2015, the Commission approved the creation of Altum (formerly named Single Development Institution – SDI) and a capital increase of more than €512 million for the period 2015-2022 (SA.36904). In view of the possible evolution of the market for SME financing and in particular the scope of the market failures, the Commission granted approval until 31 December 2022. Today’s decision is prolonging this approval, following a reassessment by the Commission. If in the future Altum were to be given further responsibilities outside the agreed remit, these may need to be notified to the Commission for approval.

During the initial period between 2015 and 2022, Altum has played an active role in supporting enterprises at different stages of their development, starting with developing business ideas to carrying out large projects if financing is not available in the private finance sector. State aid financial instruments administered by Altum are addressed to business start-ups, enterprises, rural enterprises and individuals.

For more information

The non-confidential version of today’s decision will be made available under the case number SA.100013 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

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Source – EU Commission

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